BEIJING (Reuters) - Japan's
Sony Corp and China's Shanghai Oriental Pearl Group Co
Ltd will set up two joint ventures to make and market
Sony's PlayStation games console in China, Shanghai
Oriental Pearl said in a stock exchange filing on
Monday.

One joint venture will be responsible for the console's hardware,
while the other will be focused on software, the company said in the
filing to the Shanghai Stock Exchange.

The joint ventures, which will be in Shanghai's free trade zone,
will be set up by a subsidiary of Shanghai Oriental Pearl and by
Sony's China arm.

But China is likely to be a difficult market for games consoles,
which were banned from 2000 until last January. Piracy and smuggling
of consoles is rife, and the Chinese gaming market is very different
to traditional console markets like Japan, Europe and the U.S. as
Chinese gamers predominantly play PC and mobile games.

Chinese games developers and publishers have also adopted a "free to
play" model where games are free and they make money by selling
in-game upgrades like extra lives and special weapons. Games
consoles traditionally make their money from the sale of the console
and games themselves.

Sony and Shanghai Oriental Pearl are setting up the joint ventures
in response to the suspension of the ban on game consoles within
Shanghai's free trade zone, a Sony Computer Entertainment Inc
spokesman told Reuters.

Nothing has been decided regarding the development of operations,
and details will be announced later, the spokesman said.

Sony Computer Entertainment Inc is the Sony unit responsible for the
PlayStation.

One of the joint ventures will have registered capital of 10 million
yuan ($1.60 million) and will be 51 percent owned by Shanghai
Oriental Pearl Culture Development Co and 49 percent owned by Sony
(China), Shanghai Oriental Pearl said in the filing.

The other will have registered capital of 43.8 million yuan and will
be 30 percent owned by Shanghai Oriental Pearl Culture Development
Co and 70 percent owned by Sony (China).

Sony's move comes one month after Microsoft Corp and its
joint-venture partner BesTV New Media Co Ltd announced they would
launch Microsoft's flagship Xbox One games console in China in
September.

Earlier in April, Shanghai's government said console makers such as
Sony, Microsoft and Nintendo Co will be able to manufacture and sell
consoles in China through "foreign-invested enterprises" in
Shanghai's free trade zone, after temporarily lifting the ban on
consoles in January.

China had banned game consoles in 2000, citing their negative effect
on the mental health of its youth.